Arthur Andersen's new avatar: Road ahead to rebuild reputation, business

Workers remove accounting firm Arthur Andersen's sign from Sydney central business district offices in May 2002. Photo: Reuters
Despite the nostalgia in the audit and consulting fraternity over the global efforts to revive Arthur Andersen, the iconic professional services brand that folded up in 2002, it will be a long haul for the newly set-up fledgling network to re-build its reputation and business, say experts. 

For former clients and ex-employees, the new avatar of Arthur Andersen will be different from what it was known for — an organisation with a common ownership, its work culture and business practices. This time around it will be a network of affiliate firms in different countries, using the Arthur Andersen brand.

In a statement on March 1, Paris-based Arthur Andersen global managing partner Stephane Laffont-Reveilhac said the firm had been reconstituted with 26 offices in five continents and 16 countries. The offices include those in the US (Chicago, Houston, New York, and San Francisco), Europe (Cyprus, France, and Greece), Brazil, Egypt, Indonesia, Nepal, India and other Asian countries.

Delhi-headquartered International Business Advisors, a full-service audit and tax advisory firm, has been appointed the India affiliate for Arthur Andersen. Puneet Sharma, one of the four partners of the firm, said they were in the process of getting the regulatory approvals for using the Arthur Andersen brand name in India. 

“The brand has a lot of goodwill. But re-building its reputation and business will be a long journey,” said Bobby Parikh, partner, BMR & Associates, who headed Arthur Andersen’s India operations till 2002. 

Founded in 1913 in Chicago, Arthur Andersen became one among the Big Five professional services firms, with 85,000 employees and $9.3 billion in revenues globally in 2002. However, an accounting fraud in US energy major Enron in 2001 dented the firm’s reputation beyond repair, leading to the disbanding of Arthur Andersen’s global network in 2002.   

A partner in one of the Big Four professional services firms, who had worked at Andersen India, noted that the brand had high re-call value with clients. “But just the brand is not enough to build business. It will depend on the value proposition the new firm and its affiliate bring to the table,” he said. 

Former employees said there was a particular image that clients and employees attached to the Arthur Andersen brand. “The challenge would be to live up to that image and also bring a differentiated service in the market,” said another ex-Andersen employee.

According to Parikh, the market for professional services in India has changed since 2002. “One would have to first build a scale to compete with the Big Four and that can happen over time,” he said. The Big Four — Deloitte, EY, KPMG and PwC - between them have a top line of around Rs 12,000 crore with interests in auditing and advisory services. Apart from the Big Four, there are 100-odd global audit and accounting networks that operate out of India.

The nostalgia over Arthur Andersen’s revival efforts could be seen in Stephane Laffont-Reveilhac’s March 1 LinkedIn post. There were over 800 comments and more than 2,200 shares of the post. Most comments — largely from ex-employees — gushed over the move and re-called the firm’s heyday and its work culture. One commentator noted: “…it’s not often that former employees talk so positively about their former employer.”

The jury, however, is still out whether the new avatar of Arthur Andersen will live up to its past reputation. 

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